On July 5, 2019, Rhode Island enacted a state individual mandate as part of its 2020 budget legislation. This new law requires individuals in Rhode Island to maintain acceptable health coverage or pay a penalty, effective in 2020. Rhode Island’s state individual mandate largely mirrors the federal individual mandate requirement under the Affordable Care Act (ACA), which was effectively eliminated beginning in 2019.
Rhode Island is among the first states to enact its own health insurance individual mandate. Individuals in Rhode Island should ensure that they are in compliance with the state individual mandate beginning in 2020.
Rhode Island’s individual mandate requires most individuals in the state (and their family members) to be covered under minimum essential coverage for each month of the year, beginning in 2020. Individuals that don’t obtain acceptable health insurance coverage will be penalized.
Notably, the new law provides that the state individual mandate penalty will not be enforced for any tax year in which the ACA’s federal premium tax credits become unavailable or the federal individual mandate penalty is assessed.
- Rhode Island Division of Taxation – http://www.tax.ri.gov
- 2020 Budget Legislation – http://webserver.rilin.state.ri.us/BillText19/HouseText19/Article-014.pdf
Minimum Essential Coverage
For purposes of the Rhode Island individual mandate, minimum essential coverage (MEC) has the same definition as under the ACA. MEC includes coverage under:
- A government-sponsored program, such as coverage under the Medicare or Medicaid programs, the Children’s Health Insurance Program (CHIP), TRICARE and certain types of veterans’ health coverage;
- An eligible employer-sponsored plan (including a self-funded plan, COBRA and retiree coverage), defined as any plan offered by an employer to an employee which is a governmental plan or a plan or coverage offered in the small or large group market within a state;
- A health plan purchased in the individual market; or
- A grandfathered health plan.
The Penalty Amount
Rhode Island’s individual mandate penalty is calculated in the same manner as the ACA’s individual mandate. The penalty is the greater of two amounts—the flat dollar amount ($695) or the percentage of income amount (2.5 percent of income). For purposes of calculating the penalty, income is the taxpayer’s household income minus any exemption (or exemptions, for a married couple) and standard deductions.
Families will pay half the penalty amount for children, up to a family cap of three times the annual flat dollar amount. Also, the penalty is capped at the Rhode Island statewide average premium for bronze-level plans offered through the Rhode Island health benefits Exchange.
To help administer the individual mandate, Rhode Island law requires individuals to indicate on their state income tax return whether they (and their family members) had MEC for each month of the year.
The requirement to maintain MEC applies to individuals of all ages (including children), unless that individual falls within a specific exception or is exempt. An individual is treated as having coverage for a month if he or she has coverage for any one day of that month.
The following categories of individuals are exempt from the Rhode Island individual mandate penalty:
An individual who is eligible for an exemption for any one day of a month is treated as exempt for the entire month.
To help administer the individual mandate penalty, Rhode Island imposes a reporting requirement on every entity that provides MEC to an individual during a calendar year, similar to the ACA’s reporting requirement under Internal Revenue Code Section 6055. This reporting requirement applies to:
- Employers or other sponsors of employment-based health plans, for employment-based MEC;
- The Rhode Island Medicaid single state agency, for Medicaid or Children’s Health Insurance Program (CHIP) coverage; and
- Carriers licensed or otherwise authorized to offer health coverage, for coverage they provide that is not described above.
For coverage provided by a governmental unit (or any agency or instrumentality thereof), the officer or employee who enters into the agreement to provide the coverage (or the person appropriately designated for purposes of this reporting requirement) is responsible for completing this reporting. An affected entity may contract with third-party service providers, including insurance carriers, to provide the required returns and statements.
Under this reporting requirement, entities that provide MEC are required to provide the following information to covered individuals and the Rhode Island tax administrator:
- The name, address and taxpayer identification number (TIN) of the primary insured, and the name and TIN of each other individual covered under the policy;
- The dates during which that individual was covered under MEC during the calendar year; and
- Any other information the tax administrator may require.
Affected entities are also required to provide a written statement to each individual whose name is included on the return. The statement must contain the name, address and contact information of the affected entity and the information included in the return with respect to the individuals listed. This written statement must generally be provided on or before Jan. 31 of the year following the calendar year for which the return was required to be made.
This guide is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. It is provided for general informational purposes only. Readers should contact legal counsel for legal advice.
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